Japan Stock Futures Rise, Signal Asia Rebound From Cyprus Plunge

By Adam Haigh -
Mar 18, 2013

Japan stock futures and Australian
shares rose, signaling the Asian benchmark index may rebound
after concern that Europe will plunge back into crisis wiped
$190 billion off the value of regional equities yesterday.

Futures on Japan’s Nikkei 225 Stock Average (NKY) expiring in
June closed at 12,325 in Chicago yesterday, up from 12,170 at
the close in Osaka, Japan. They were bid in the pre-market at
12,340 in Osaka at 8:05 a.m. local time. Australia’s S&P/ASX 200
Index advanced 0.5 percent, recouping some of yesterday’s 2.1
percent drop after Cyprus proposed an unprecedented levy on bank
savings to pay for a European bailout. New Zealand’s NZX 50
Index slipped 0.1 percent today.

“Investors are not overly concerned about the potential
for political contagion from the imposition of a deposit tax in
Cyprus,” said Ric Spooner, chief market analyst at CMC Markets
in Sydney. “Investors and bank depositors appear to accept
assurances that this is a one-off measure that would not be
imposed on citizens of larger debtor nations elsewhere in
Europe.”

Europe Concern

The MSCI Asia Pacific Index, the benchmark regional
equities gauge, yesterday posted the biggest drop in eight
months amid concern Cyprus will reignite the European debt
crisis and that China will step up property curbs to temper
rising prices. Every benchmark gauge in the Asia-Pacific
dropped, with the regional measure losing about $190 billion in
market value, equivalent to almost eight times Cyprus’ annual
gross domestic product.

Asian stocks rallied 3.7 percent this year through
yesterday as improving economic data from the U.S. and
speculation that Japan will unleash more stimulus countered
China’s efforts to rein in property prices.

Earnings-per-share on the MSCI Asia Pacific Index will grow
10 percent in the next 12 months and expand a further 15 percent
in the following year, according to data compiled by Bloomberg.
The gauge traded at 14.6 times average estimated earnings
compared with 14 for the Standard & Poor’s 500 Index (SPX) and a
multiple of 12.8 for the Stoxx Europe 600 Index, according to
data compiled by Bloomberg.

‘Positive Year’

“While the market may well be subjected to bouts of
concern again, we see the year being a positive one for
equities,” said Wellian Wiranto, an investment strategist at
the wealth management unit of Barclays Plc in Singapore, which
manages $248 billion. “In some ways, the degree in which the
market has been performing year-to-date is especially
encouraging, given the world was served with quite a number of
event risks.”

Futures on the Standard & Poor’s 500 Index were little
changed. The Dow Jones Industrial Average dropped 0.4 percent
yesterday, after reaching a record last week, following declines
European and Asian in equity markets.

The U.S. Federal Open Market Committee is scheduled to
begin a two-day meeting today. The committee in December agreed
to link its zero-interest-rate policy to thresholds for
unemployment and inflation so investors and households know what
conditions will prompt the central bank to consider raising
borrowing costs.